Investment and infrastructure gaps threaten EU’s shipping decarbonization ambition

For Europe to meet its decarbonization objectives, a ‘robust’ supply chain for renewable and low-carbon fuels must be built on the continent, Clean Maritime Fuels Platform, an industry initiative that aims to improve communication between the shipping sector and fuel producers, has shared.

As explained, smooth access to sustainable marine fuels is a top priority for the decarbonization of the shipping industry which, according to the Draghi report on the future of European competitiveness, is one of the most difficult sectors to decarbonize.

In fact, it has been estimated that shipping requires approximately €40 billion in annual investments between 2031 and 2050 to accomplish its climate neutrality objectives.

Per Clean Maritime Fuels Platform, however, renewable and low-carbon fuels generally face a sea of uncertainties that tend to deter public and private investment.

These include technological risks and high upfront capital requirements that put first movers at a disadvantage, considerable production costs of eco-friendly duels as well as a discrepancy of business models between producers—who seek long-term contracts at bigger prices—and users—who prefer short-term commitments for smaller fuel volumes as they are believed to carry less risk.

The aforementioned factors are reportedly linked to elevated financial risks that could prove to be “insurmountable without more tailored public support” than what the existing EU Hydrogen Bank—an association of EU-based companies devoted to accelerating the European hydrogen industry—and ETS Innovation Fund schemes offer, the Clean Maritime Fuels Platform accentuated.

As disclosed, in order to tackle these challenges ‘more effectively’, the platform has suggested that the European Commission:

• Include renewable and low-carbon fuels and technologies needed in the Clean Industrial Deal;
• Utilize the sustainable transport investment plan (STIP) to de-risk investments needed to speed up the production and distribution of clean fuels for shipping;
• De-risk projects through public financial support from the EU and national ETS revenues to strengthen the EU’s industrial base for eco-friendly fuels;
• Facilitate the role of ports as energy hubs through fuel infrastructure mandates.

EU’s Commissioner for Sustainable Transport and Tourism Apostolos Tzitzikostas reflected: “The Clean Industrial Deal due later this month will set the stage for a robust and competitive sustainable European industry.“

Sotiris Raptis, European Community Shipowners’ Association’s (ECSA) Secretary General, stressed that: “Making clean fuels available is a prerequisite for the energy transition of shipping. The Clean Industrial Deal is a great opportunity to set the conditions to upscale the manufacturing of clean fuels for shipping. Unlocking public and private investments through the use of EU and national ETS revenues is vital to bridge the immense price gap between clean and conventional fuels.”

Sharing thoughts regarding the initiative, the European Waste-based & Advanced Biofuels Association (EWABA)’s Secretary General Angel Alvarez Alberdi further highlighted: “The EU has the opportunity to lead the global clean maritime transition by developing a comprehensive and sustainable industrial strategy. Promoting renewable fuels, including waste-based and advanced biodiesel, will be key to strengthening competitiveness and accelerating the shift toward greener shipping.”

R. Tim Eestermans, Managing Director (Europe) of the Methanol Institute, said that the Clean Industrial Deal needs to be more than just a vision; it should be a “catalyst of action” and that Europe had a choice – to “lead now or be left behind”.

“Building a reliable supply chain for renewable and low-carbon fuels isn’t just about cutting emissions; it’s about securing Europe’s industrial strength by creating new economic opportunities and enhancing the EU’s global competitiveness as a hub for zero-near-zero GHG emission fuel production,” Eestermans concluded.